3M Stock Jumps 4% on Q1 Revenue, Profit Beat
The stock in 3M Co. (NYSE: MMM) rose 4% to $159.78 per share by midday Tuesday after the company reported better-than-expected revenue and profit in the first quarter.
The Minnesota-based maker of health care and safety products said in a statement today that its revenue in the three months through March reached $8.08 billion, up 3% year-over-year. Net income soared to $1.29 billion, or $2.22 per share, compared with $891 million, or $1.51 per share, in the same period in the preceding year.
During the Covid-19 crisis, 3M has watched the market demand in the sectors for personal safety, home improvement, general cleaning, food safety, and biopharma filtration pick up significantly. However, despite the strong results today, the company has seen "significant weakness" to its sectors in oral care, automotive OEM and aftermarket, general industrial, commercial solutions, and stationery and office. It attributed the drop to social distancing and shelter-in-place requirements.
"In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic," Mike Roman, the chairman and chief executive officer of 3M, said in a statement today.
He added, "At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic."
As a result, 3M is making efforts to cut costs and estimates to save $350 to $400 million in the second quarter. The reductions include adjusting capital allocation plans, reducing its full-year 2020 cap-ex plan, and offering paid short-term furloughs in operations most impacted by the Covid-19.
With today's momentum, 3M will hope to rebound to its early 2020 trading price, as shares in the company were down 10% year-to-date.
While it may be encouraging for shareholders to see 3M post strong financials at the time of the damaging Covid-19 outbreak, uncertainties remain. The company said it is withdrawing its earlier full-year 2020 guidance and will begin reporting monthly sales in May. Keep an eye on the stock in 3M as things could get more interesting in the next few months.